Hezbollah-owned Manar TV in Beirut announced the death saying: "With all pride we declare a great jihadist leader of the Islamic resistance in Lebanon joining the martyrs... the brother commander hajj Imad Mughniyeh".

"After a life full of jihad, sacrifices and accomplishments ... he died a martyr at the hands of the Israeli Zionists," it quoted a Hezbollah statement saying.

Later, the Syrian government confirmed Mughniyeh had been killed and said investigations were still underway to find the perpetrators.

"Syria, which condemns this cowardly terrorist act, expresses condolences to the martyr family and to the Lebanese people," Interior Minister Bassam Abdul-Majeed said in a statement.

Iran also condemned the killing, praising Mughniyeh as a martyr and describing the attack as "yet another brazen example of organised state terrorism by the Zionist regime".

Hezbollah said a funeral service would be held in its stronghold in the southern suburbs of Beirut on Thursday.

The city has been tense ahead of a mass rally also on Thursday to commemorate three years since the assassination of former Prime Minister Rafik Hariri.

There have been repeated clashes between supporters of the pro-Western government and the opposition, which includes Hezbollah.

High-profile attacks

Hezbollah was founded in 1982 by a group of Shia Muslim clerics after the Israeli invasion of Lebanon.

It has emerged in recent years as a major political and military force in Lebanon, after military successes against Israel.

Shia militants who went on to become members are thought to have planned some of the most high-profile kidnappings and attacks of the 1980s, including the 1983 suicide bombings in Beirut that killed hundreds of US and French service personnel.

Mughniyeh was among several suspects indicted in the US for the 1985 hijacking of a TWA airliner in which a US Navy diver was killed.

Israel believes he was involved in planning the 1992 bombing of Israel's embassy in Argentina in which 29 people were killed, and the blast at a Buenos Aires Jewish centre two years later that killed 95.

The Israeli government, which has been accused of a series of assassinations of its enemies in various countries over the years, stopped short of an outright denial that it had killed Mughniyeh.